Daily Morning Note – 13 August 2018

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YOUR PHILLIP SUMMARY

Stocks fell on Friday as geopolitical concerns pushed the Turkish lira to a record low against the dollar and rattled investors. The lira briefly fell 20 percent to a record low after President Donald Trump authorized the doubling of metals tariffs on Turkey.

The geopolitical worries come as the U.S. is embroiled in a trade war with China. Last week both governments announced the possibility of imposing tit-for-tat tariffs on an additional $16 billion worth of goods.

For the week, U.S. crude dropped more than 1 percent, posting its sixth straight weekly loss for its worst losing streak in 3 years. Escalating trade disputes have dimmed the outlook for economic growth and boosted the dollar, making oil more expensive for consumers using other currencies. This comes as U.S. sanctions against Iranlooked set to tighten supply.


RESEARCH REPORT

ComfortDelGro Corp Ltd – Organic and inorganic growth to drive a better 2H18

Recommendation: Accumulate (Maintained), Last Close Price: $2.38

Target Price: $2.78 (previously $2.69), Analyst: Richard Leow

– 2Q18 revenue 4.0% higher than estimated; 2Q18 PATMI within our
expectation

– 1H18 revenue and PATMI met 51% and 46% respectively of our full year FY18
estimate

– Expect 2H18 PATMI to be stronger than 1H18, due to full 6-month
contribution from Seletar bus package, ramp-up of DTL ridership and new
subsidiaries

– YoY variance in PATMI has narrowed to -5.5% in 2Q18 from 1Q18’s reported –
19.6% (-7.1% recurring)

– 4.35 cents/share interim dividend declared, same as last year
– Maintain Accumulate; new target price of S$2.78 (previously $2.69) after
tweaking our assumptions for contribution from acquisitions


Technical Analysis: S&P 500 – Monthly recession tracker – July update (risk-on)

Analyst: Jeremy Ng

– All the indicators in the Recession Tracker remain well within their thresholds
signalling for further upside in the general equity market (positive)

– Extreme short positions are building up again in VIX Futures warning for an
impending spike higher in the VIX index (negative)

– Consumer sentiment remained at their multi-decade high signals further
optimism (positive)

– Expect the DJIA, S&P 500 and Nasdaq 100 index to stay within their uptrend
and to retest their respective record highs

China Sunsine Chemical Holdings Ltd – Aim for the long-term prosperity

Recommendation: Buy (Mantained), Last Done Price: S$1.23

Target Price: S$1.77, Analyst: Chen Guangzhi

– Uptrend in ASP and sales volume continued in 2Q18.

– GPM and NPM reached a record high in 2Q18.

– New capacity is expected to get approval by 3Q18.


BREAKING NEWS

S&P 500 logs worst day in 6 weeks as Turkey’s lira crisis spotlights global risks. The S&P 500 SPX, -0.71% lost 20.30 points to 2,833.28, a slide of 0.7%.The Dow Jones Industrial Average DJIA, -0.77% fell 196.09 points, or 0.8%, to 25,313.14. The Nasdaq Composite Index COMP, -0.67% fell by 52.67 points to 7,839.11.

Oil Up On Iran Sanctions But Set For Weekly Decline. Benchmark Brent crude oil settled 74 cents higher at $72.96 a barrel on Friday. U.S. light crude was 82 cents higher at $67.63 a barrel. Crude oil prices rose more than 1.0 percent on Friday as U.S. sanctions against Iran looked set to tighten supply, but futures contracts posted a weekly decline as investors worried that global trade disputes could slow economic growth and hurt demand for energy.

Turkey taking action to ease market concerns: finance minister. Turkey has drafted an action plan and its institutions will start taking necessary steps on Monday morning to ease financial markets’ concerns, finance minister Berat Albayrak said, after the lira plunged last week.

Singapore’s economy grows 3.9% in Q2; expected to slow down in H2 2018.


Source: SGX Masnet, Bloomberg, Reuters, The Business Times, Channel NewsAsia, Phillip Securities Research

Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research

Read the research report(s), available through the link(s) above, for complete information including important disclosures

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